A few months ago I wrote about my strategy for saving my recent raise and getting out of debt. I am happy to report that I paid off my credit card two weeks ago. I feel like a huge weight has been lifted off my shoulders, but this was no easy feat. I had to budget and plan every step of the way. Here is the recap of my strategy:
- I kept three bank accounts: a) out-of-pocket expense account, b) bill pay account c) savings account.
- Every payday I transfered the bulk of my paycheck into my bill pay and savings accounts.
- I kept $200 in my checking account per pay period to use for my out-of-pocket expenses including - gas, groceries, clothes, going out, etc. ( FYI - I get paid once a week.)
- After I paid all my bills for the month and paid off a considerable amount of my credit card debt, anything left in the bill pay account would be transferred to savings.
Now that the credit card debt is paid off, that money will go directly into my savings account rather than the bill pay account.
My current goal is to grow my savings account so that I have a nice nest egg by the end of the year.
3 responses so far ↓
1 Jude // Jul 9, 2008 at 5:16 pm
Wow - this is great news!!! This is exactly what I’ve been saying for years. NO ONE has more interest in taking good care of your money than you do. No one can do a better job either.
People often think if they just earned more money, everything would be fine. Not true! Think of times you’ve gotten that raise at work and before you know it, it’s all being spent — and maybe more.
You’ve found the secret. It is NOT more, it is reallocating what you already have! It is asking the question: OK, if I get this, what will I have to give up?
Congratulations!
2 gillian // Jul 9, 2008 at 9:44 pm
Also, if you save $60 a week, you’ll have $10k in 4 years. That’s pretty amazing. Now if only I could save $60 a week.
What I’m curious about (and you may have addressed this initially) is how much your debt and interest rate(s) was/were and how much you threw at it a week or a month or whatever and how long it took you to pay it off. But, if you already talked about that, or don’t want to go into TOO much detail, I understand
Congratulations!!!
3 jessica // Jul 10, 2008 at 8:16 am
I used a service called Credit Card Debt Reducers who took interest off my card. And an overlimit fee.
They are the best I’ve found for lowering debt.
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